Oct. 1 (Bloomberg) -- Sony Corp., the world's second-biggest maker of consumer electronics, raised 320 billion yen ($2.8 billion) in its insurance unit's initial public offering, Japan's biggest this year.

A total of 800,000 Sony Financial Holdings Inc. shares were sold at 400,000 yen each, Tokyo-based Sony said today.

Sony sold the shares at the top end of its range, spurring demand by reducing the price from an original reference level of 415,000 yen, after losses in the U.S. subprime-mortgage market triggered a global rout in stocks. Proceeds from the share sale of Sony Financial, the biggest profit contributor after consumer electronics, will help Sony increase production of Bravia televisions and fund the money-losing PlayStation unit.

``The price is acceptable considering it was set when the stock market hadn't fully recovered from the subprime shock,'' said Masaki Iso, who oversees about $7.3 billion as head of Japanese equities at Yasuda Asset Management Co. in Tokyo. ``Sony Financial's stock has potential to rise as the market will recover.''

Iso counts shares of Sony and Matsushita Electric Industrial Co., the world's largest consumer electronics maker, among his holdings.

Sony Financial includes Sony Life Insurance Co., automobile insurer Sony Assurance Inc., and online bank Sony Bank Inc. The company started operations in 1979 as an insurance venture of Sony Corp. and Prudential Insurance Co. of America, according to its Web site.

Annual Gain

Sony said it expects to book a 14 billion yen gain from the sale in the year ending March 2008.

The IPO is the largest in Japan since Aozora Bank Ltd.'s 351 billion yen offering in November 2006. Sony Financial will be Japan's second publicly traded life insurer after T&D Holdings Inc. was listed in April 2004.

Sony sold 725,000 Sony Financial shares, or a 34.5 percent stake. The unit sold 75,000 of new stock. The parent company may sell as many as 70,000 more shares, depending on demand, Sony Financial said.

Trading starts on the Tokyo Stock Exchange on Oct. 11.

The sale comes amid a decline in Japanese banking and financial stocks, this year's worst performers on the Topix index.

``The offering is too big for this market, whose outlook is not so strong,'' Katsuhiko Mori, who helps manage about $1 billion in Japanese equities and bonds at Daiwa SB Investments Ltd. in Tokyo, said before the announcement. ``I still consider this price range expensive.''

Mori declined to specify his holdings.

JPMorgan Chase & Co. and Nomura Holdings Inc. managed the share sale.

Sony shares gained 1.4 percent to 5,650 yen at the close on the Tokyo Stock Exchange, before the announcement.

To contact the reporters on this story: Junko Fujita in Tokyo at jfujita@bloomberg.net; Hiroshi Suzuki in Tokyo at hsuzuki5@bloomberg.net.

Last Updated: October 1, 2007 04:37 EDT